The Panama Canal is drying up thanks to a drought. Economists say the situation will cause problems for the Holiday shopping season due to supply chain backups. Great. Here we go again. More cost increases are on the horizon. Though we’ve reported on this previously, it reminds us that we’re about to pay more for things we’ve ordered. That’ll help inflation.
According to reports, forty percent (40%) of all US container traffic flows through the Panama Canal. Such a figure does not bode well for companies struggling to bring goods to the US mainland.
A severe drought is causing shipping delays in the Panama Canal that could wreak havoc across supply chains and increase consumer costs worldwide, MSN reports.
The Panama Canal is a vital shipping route that connects the Atlantic to the Pacific Ocean through a series of lock mechanisms. The mechanisms rely on fresh water from surrounding lakes, and a historic drought has depleted those water sources, causing massive delays, per MSN.
There are currently over 200 ships waiting to cross the canal, according to The Wall Street Journal, and some of them are shelling out multi-million dollar fees to jump the line, Bloomberg reports. Daily Caller
So, how can a tropical country like Panama be in a drought? It concerns the timing of the regular wet and dry seasons. But the situation will likely cause jumps in the prices of goods right around the Christmas holiday.
The 109-year-old canal works through a water lock system that move ships up or down as they make it to the other side. Each ship that goes through the canal uses millions of gallons of water that gets sucked in from nearby lakes. Without this fresh water, the canal can’t operate.
There’s always been enough rainfall flowing to these lakes, but this year a longer dry season and a shorter rainy season have led to a shortage of freshwater to feed the canal, according to canal officials…
And the reason why has to do with the way this canal is structured. So, basically, the way this works is that as you enter one side, a series of locks, so think of them as like water elevators – they have to move ships either up or down as they make it to the other side.
In order to do that, the canal sucks water in from nearby lakes. These are freshwater sources. So basically, it’s rainfall that comes down, feeds the rivers, the rivers feed down into the canal. ABC
With each ship using around 55 million gallons of water to traverse the canal, the lack of water causes long delays as weight restrictions on cargo and caps on the number of ships going through are instituted. The Panama Canal has had to start water-saving measures to ensure the ships can get through. As of this writing, at least 150 ships are waiting to traverse the series of locks on both sides of the canal. This is currently the “wet” season – if the rivers don’t reach their usual high points, the canal could cause further delays. Officials say this crisis isn’t as bad as it was during the Pandemic, but it is a severe problem, especially for your pocketbook.
“Without fresh water, this canal cannot operate. It’s that simple.” Matt Rivers, ABC correspondent in Panama.
Climate cultists say it’s from “climate change.” Instead, it’s just a natural phenomenon in the earth’s cycles called “El Nino.” And maybe we’re supposed to learn something from supply chain messes. What do you think?
Cross-Posted with Conservative Firing Line